Nanny Pay Taxes
I am starting to do research on hiring a nanny. We want to pay the nanny on the books with all the required taxes , etc. I have two questions: 1) have folks found it more difficult to find a nanny willing to be paid on the books and 2) did you find that the nanny had a higher pay rate and if so, what was the range?
Jan 23, 2018
Parent Replies
We paid on the books, as it was important to us (and also, you can't claim the child care FSA pre-tax dollars otherwise, and it can complicate workers' comp insurance if you are hosting, too). We had a share with each child, and while both nannies preferred we pay under the table, they agreed to be paid on the books when we said that was a condition of joining the share. With the first nanny, the rate of pay was the same. With the second, we paid slightly more, but that was because it was an unusual situation where the other family continued to pay under the table, so we had to raise our rate of pay to the minimum wage since in the state's eyes we were the only employer. I would not choose that kind of setup again as it was a pain--if it's on the books, everything should be on the books. I would not otherwise have been willing to pay more--you will pay quite a bit in employer taxes so it is already more costly to pay legally, and there are plenty of wonderful nannies willing to work on the books. Notably, the first nanny we worked with took medical leave that was covered by SDI at one point and, after the share ended, received unemployment while she was lining up her next job. She would not have been eligible for either of these had we not paid on the books.
We pay our nanny on the books and this was non-negotiable when we were searching for a nanny. In answer to your first question, yes, it did narrow the pool of nannies. We screened out about half the nannies by phone just by asking them if they were willing to have taxes withheld. We ended up interviewing six nannies. A couple did say they wanted a higher wage if we were going to withhold. One said she was okay being paid on the books for all regular pay, but wanted to be paid overtime in cash. (We were also non-negotiable on following wage and hour law.)
In the end, we were pleasantly surprised that the nanny we liked the best was willing to be paid on the books and did not require additional wages to do so. We pay $12 per hour per family for a two child nanny share. So the nanny makes $24 per hour for regular pay and $36 per hour for overtime.